A client calls. They want a contractor placed in Germany, the UAE or Singapore. You’ve made hundreds of placements in the UK, but you don’t have a registered entity in that market, you’ve never placed there before, and the start date is soon.
The question is not whether you want the work. It’s whether you can do it compliantly, and how quickly.
In most cases, the answer is yes, if you have the right partner and the right model in place before you commit.
In brief
- you do not need a local entity to make an international contractor placement
- Employer of Record (EOR) and Agent of Record (AOR) partners hold the local infrastructure, handle compliance and run payroll in the relevant jurisdiction
- the first decision is whether the worker will be engaged as an employee or a self-employed contractor, as that determines which model you need
- you need to understand local employment costs, currency and onboarding timelines before confirming your margin
- Sapphire provides EOR and AOR across 102 countries, with dedicated international specialists who assess the right structure for each placement
Why you don’t need a local entity
Most agencies assume that placing a contractor in a new country means registering a company there, hiring locally or spending months understanding that jurisdiction’s employment law. For a single placement, or even a regular programme of international placements, that’s not the right approach. It’s expensive, slow and creates a permanent infrastructure commitment that’s hard to unwind.
EOR and AOR infrastructure exists precisely to remove that barrier.
When you use an EOR or AOR partner, that partner holds the local legal entity in the relevant country. They carry the employment or contractor engagement obligations under local law. They manage payroll, handle tax deductions, take care of statutory contributions and ensure the worker is engaged compliantly from day one.
Your role doesn’t change. You make the placement, manage the client relationship and invoice the end client as you would for any other assignment. The EOR or AOR partner operates behind that relationship as the compliant employment or contractor engagement layer in the relevant market.
What this means practically:
- your agency doesn’t need to register a company in Germany, the UAE or Singapore
- you don’t need to hire a local payroll expert or employment lawyer
- you don’t take on direct employer obligations in a jurisdiction you may not have placed in before
- the worker is engaged correctly and paid compliantly, without the delays that come from building local infrastructure
This is how agencies that don’t want to walk away from international work follow their clients into new markets. The infrastructure is already there. The question is finding the partner who has it.
The first decision: employee or self-employed?
Before you choose a model, you need to establish the worker’s employment status in the relevant jurisdiction. This is the step agencies most often skip, and it’s the most important one.
A contractor who sits outside IR35 in the UK is not automatically treated as self-employed in another country. Some markets have much narrower definitions of self-employment than the UK does. Some apply tests that look at the level of control exercised over the worker, the degree of economic dependence on a single client, or whether the worker can substitute themselves. If a worker would be classified as an employee under local law, you cannot engage them as a contractor simply because that’s more convenient or cheaper.
This is the decision point between EOR and AOR.
EOR is right when the worker will be engaged as an employee. The EOR becomes the legal employer in the relevant country, handles employment contracts, statutory benefits, payroll and termination obligations. The worker takes direction from your end client day-to-day, but the employment relationship sits with the EOR. Markets with strong employment protection frameworks, including Germany, France and much of the Middle East, typically require EOR for workers who would be classified as employees under local law.
AOR is right when the worker is genuinely self-employed and would be classified as an independent contractor under that jurisdiction’s own tests. The AOR manages the services contract, ensures compliance for contractor engagements and processes payments. No employment relationship is created. AOR is frequently used in technology, engineering, life sciences and renewable energy, where contractors with specialist skills operate across multiple clients. The critical qualifier is that the worker must meet local self-employment tests – not simply that the contractor or the client prefers that status.
Choosing the wrong structure creates misclassification risk that sits with your agency and your end client. If you’re uncertain about a worker’s status in a specific jurisdiction, take advice before you place. Getting this right at the outset is far less costly than correcting it after the assignment has started.
What the placement process looks like in practice
Once you’ve confirmed the right model for the assignment, the process is more straightforward than most agencies expect.
Step 1: Refer to your EOR or AOR partner
Share the placement details: the role, the country, the worker, the assignment duration and the commercial terms. Your partner confirms the appropriate model and structure for that specific jurisdiction.
Step 2: Compliance and cost assessment
Your partner provides a breakdown of local employment costs or contractor engagement costs in the relevant jurisdiction. This includes employer-side statutory contributions, any local insurance requirements and currency considerations. You need this before you confirm your margin to the client, not after.
Step 3: Worker onboarding
The partner manages onboarding directly with the worker. For EOR engagements, this includes the employment contract, statutory documentation and payroll setup under local law. For AOR engagements, this covers the services agreement and contractor compliance verification. Sapphire’s onboarding is designed around the speed recruitment requires, so contractors can start quickly.
Step 4: Assignment start and payroll
Once onboarding is complete, the assignment starts. Your partner runs payroll in the relevant jurisdiction, manages statutory deductions and pays the worker in local currency. You invoice the end client on your standard commercial terms.
Step 5: Ongoing account management
Your partner handles any in-assignment changes, extensions or compliance issues. You maintain the client and candidate relationship.
What your agency needs to provide: the role and assignment details, the worker’s personal information required for onboarding in that jurisdiction, the agreed commercial rate and currency, and confirmation of the client’s billing requirements.
What to check before the placement begins
Taking on an international placement without the right checks in place creates commercial risk as well as compliance risk. Before you confirm the placement, work through these questions.
Is this role genuinely suited to the chosen model in that jurisdiction? Don’t assume an EOR or AOR structure works in every country for every type of engagement. Some jurisdictions restrict or regulate specific engagement models. Some sectors have additional rules around contractor engagement. Your partner should confirm this before you proceed, not after.
Does your partner have established expertise in that specific country? Coverage across a large number of countries is not the same as established capability in a specific market. Ask directly: does your partner have existing infrastructure or verified local partnerships in that jurisdiction? Have they placed in that market before? What do they know about that country’s employment tests, payroll requirements and typical onboarding timeline? A partner who is vague on country-specific detail should be a prompt to dig further before you commit.
Have you factored local employment costs into your margin? Employer-side costs vary significantly by country. Statutory contributions, social security, mandatory benefits and insurance requirements all add to the total cost of placing a worker internationally. These costs are often higher than equivalent UK employer costs and differ considerably between markets. If you’ve quoted a margin based on UK cost assumptions, your numbers will not hold.
What are the payment terms and currency?
Establish how the worker expects to be paid (currency, frequency, local banking requirements) and how your client will pay you. Agree on exchange rate treatment before you confirm the placement, as currency movement can affect margin on international assignments in ways that don’t apply domestically.
What does the client know about the model?
Some end clients are unfamiliar with EOR and AOR structures and may have questions about who employs the worker, how compliance is managed and what happens if the assignment changes or ends. Being able to explain the model clearly, and having a partner who can support that conversation, reduces friction during the placement.
How Sapphire supports international placements
Sapphire provides EOR and AOR across 102 countries, covering the placements agencies most commonly encounter in technology, engineering, renewable energy, life sciences, finance and construction.
Supporting agencies with international placements is not a new offer. Sapphire has been working with recruitment businesses for 12+ years, and more than 500 agencies rely on Sapphire’s services across both domestic and international placements. Sapphire’s international operation has seen 200% year-on-year growth, reflecting the pace at which agencies are following clients into new markets and the demand for a partner who can support those placements compliantly.
For international placements specifically, Sapphire’s approach is:
- Assessment first. A dedicated international specialist reviews every placement and recommends the right model – EOR or AOR – for the specific role, worker and jurisdiction, rather than applying a standard approach across every market.
- Country-specific knowledge. Sapphire has established capability in key international markets, including Germany (where AUG-licensed payroll applies), Spain (where the EOR includes enhanced civil liability insurance of up to €3 million) and the Netherlands, as well as across the Middle East and Southeast Asia.
- Fast onboarding. The onboarding process is built around the speed recruitment requires. For example, workers placed in Spain can typically be onboarded within a few days of completing the referral.
- One partner across multiple markets. Rather than coordinating separate suppliers in each country, agencies work with a single point of contact for all international placements. This reduces the complexity of running multi-market programmes and keeps compliance responsibility consolidated.
- Market intelligence. Regular insight and proprietary data on where international contractor demand is growing, including sector and geography.
The commercial case for having an international partner in place before you need one is straightforward. If a client asks you to place in a new market and you can say yes immediately, you win the work. If you spend two weeks finding a local supplier and assessing their capability, you’re either delaying the placement or losing it to an agency that already has the infrastructure.
The agencies best placed to follow clients into new markets are the ones who already have a partner capable of operating there.
Frequently asked questions
Can a UK recruitment agency make placements internationally without registering a company abroad?
Yes. EOR and AOR structures allow agencies to engage workers in overseas markets through a partner who holds the local entity and manages compliance. The placing agency makes the placement and manages the client relationship without needing its own registered entity in that jurisdiction.
What is the difference between EOR and AOR for international contractor placements?
An Employer of Record (EOR) becomes the legal employer of the worker in the relevant country, handling employment contracts, payroll, statutory benefits and termination obligations. An Agent of Record (AOR) manages the engagement of a genuinely self-employed contractor under a services agreement – no employment relationship is created. Which model you use depends on the worker’s status in the relevant jurisdiction, not on commercial preference.
How do I know whether a worker is an employee or self-employed in another country?
You can’t rely on UK IR35 status or the worker’s preference. Most jurisdictions apply their own tests, looking at factors like control, economic dependence and the ability to substitute. Your EOR or AOR partner should advise on the worker’s likely status in the specific country before you confirm the engagement structure. If the advice is unclear, take specialist employment law advice for that jurisdiction before proceeding.
How quickly can an international contractor start once the engagement model is confirmed?
Onboarding timelines vary by country and model. EOR engagements typically involve more documentation than AOR engagements, and some jurisdictions require additional steps. A good partner gives you a realistic timeline at the start of the process so you can manage your client’s expectations.
What costs should I factor in for an international contractor placement?
Beyond the worker’s rate, factor in employer-side statutory contributions, social security, any mandatory benefits or insurance requirements in the relevant jurisdiction, and the EOR or AOR partner’s fee. These costs differ significantly by country and are often higher than equivalent UK employer costs. Confirm the full cost structure before you agree your margin with the client.
Does Sapphire cover both EOR and AOR internationally?
Yes. Sapphire provides both models across 102 countries, with dedicated international specialists who assess the appropriate structure for each placement and support the agency through onboarding, payroll and in-assignment management.
Speak to Sapphire’s Global Workforce team
If you have an international placement to make, or a client who’s likely to ask, speak to Sapphire’s Global Workforce team. They’ll assess the right structure for the placement, give you a clear picture of local costs and onboarding timelines, and support you through the process from day one.
Contact the Global Workforce team →
